Responding to a hundred thousand howls and narrowly heading-off the filing of a formal complaint with the FTC by privacy advocates, Facebook announced last week it had pulled the plug on changes it proposed to make to its Terms of Service.

Without properly notifying users, Facebook tried to amend its TOS in a way that gave the burgeoning social network perpetual rights to use member content for commercial gain, even after a user Xed out an account deleting all content in the process.

Facebook introduced the changes via an early February post by its General Council on the company blog.

Few people noticed until Consumerist.com posted this gem on its blog: “Facebook’s New Terms of Service: ‘We Can Do Anything We Want With Your Content. Forever.’”

Chief executive Mark Zuckerberg initially defended the policy shift.

Then he heard that the plan wasn’t sitting well with Marc Rotenberg, the executive director of the Electronic Privacy Information Center.

When asked by Facebook reps, Rotenberg disclosed he had prepared a legal brief against the company and was one keystroke away from emailing it to the Feds.

An hour later Facebook called back to say it was dropping the changes.

Several days later, Facebook turned the situation around by revealing plans for an open governance system in which Facebook users could comment and vote on the site’s policies regarding the management of personal information.

“As people share more information on…Facebook, a new relationship is created,” Zuckerberg concluded.

“The past week reminded us that users feel a real sense of ownership over Facebook itself, not just the information they share.”